Daniel Ives Says Buy These 2 AI-Driven Tech Stocks for a Bullish Grand Finale

Tech shares had been extending their latest restoration on Tuesday, with the tech-heavy NASDAQ surging 1.74%. The excellent news, in keeping with Wedbush’s Daniel Ives – a 5-star analyst rated within the high 2% of the Road’s inventory professionals – is the event of a tech rally that’s anticipated to conclude the yr on a bullish observe.

Ives doesn’t hesitate to clarify his stance, writing in a latest observe on the state of affairs and prospects for tech shares: “We see tech shares rallying into year-end as the brand new tech bull markets powers by means of close to time period Fed worries… It’s the rocket ship-like trajectory of AI pushed progress that can hit the shores of the tech trade over the following 12-18 months that speaks to our unabated bullishness for tech shares.”

Towards this backdrop, Ives has pinpointed a chance in two AI-driven shares that he thinks are able to take advantage of this new tech bull market. We ran the pair by means of the TipRanks database to seek out out what different Road analysts must say too. Let’s test the outcomes.

Consensus Cloud Options (CCSI)

Say ‘fax,’ and also you’ll be hopelessly transported again to the Nineties for most individuals. Nevertheless, in the present day’s trade has a solution within the type of digital cloud faxing. The primary inventory we’ll take a look at is Consensus Cloud Options, an data tech agency that focuses on this area of interest, providing digital cloud faxing and different information transmissions to quite a lot of industries. The corporate has a very sturdy place within the healthcare trade, nevertheless it additionally serves shoppers in finance, insurance coverage, actual property, and manufacturing.

Consensus Cloud’s merchandise embody eFaxCorporate, the trade’s #1 e-faxing platform, in addition to platforms for interoperability, API connectivity, NLP/AI doc processing, and HIPAA compliant e-signatures. With a 25-year historical past of making and advertising superior information options for regulated industries, the corporate has mixed its expertise with the most recent in safe cloud and information doc transmission options.

To provide one instance, Consensus Cloud introduced earlier this month the discharge of its Readability Scientific Documentation service, a instrument optimized for the healthcare trade. Readability DC leverages pure language processing and AI to extract related information from unstructured paperwork, reminiscent of faxes, handwritten notes, and scanned pages, guaranteeing they’re accurately attributed to the corresponding affected person document.

Robust providers added as much as an earnings beat within the final quarterly report, regardless of a income miss. Consensus Cloud reported $92.8 million on the high line for 2Q23, $1.3 million beneath the estimates. Income for the quarter was up a modest 1.8% year-over-year. On the underside line, the corporate’s earnings got here in at $1.36 per adjusted diluted share by non-GAAP measures. This end result was down 5.6% y/y, however on the similar time beat the forecast by 11 cents per share.

In Daniel Ives’ view, Consensus Cloud has sound long-term prospects forward of it. The highest analyst units out an upbeat view of that path: “Consensus Cloud Options delivered comparatively sturdy FY2Q23 outcomes that includes a miss on the top-line and a beat on the bottom-line as the corporate continues to witness sluggish choice making and elevated massive deal scrutiny on account of a troublesome macro backdrop… Whereas the corporate anticipates to see additional headwinds into 2H23, CCSI is well-positioned to scale its upsell and cross promote alternatives inside its buyer base whereas increasing to new marketplace for additional top-line progress.”

“We view this as a usually optimistic quarter within the CCSI story with the go-to-market technique realignment now positioning the corporate in an excellent alternatives to develop its pipeline throughout a number of industries with its expansive product portfolio,” Ives summed up.

Ives makes use of these feedback to again up his Outperform (i.e. Purchase) ranking on CCSI , and his $42 worth goal implies that the inventory will recognize by ~34% within the yr forward. (To look at Ives’ observe document, click on right here)

Trying on the consensus breakdown, 2 Buys and 1 Maintain have been issued within the final three months. Due to this fact, CCSI will get a Average Purchase consensus ranking. Primarily based on the $39.33 common worth goal, shares may surge ~25% within the subsequent yr. (See CCSI inventory forecast)

Pegasystems Inc. (PEGA)

Subsequent up is Pegasystems, a tech firm providing a user-friendly platform to streamline enterprise operations. The corporate’s software program is designed for enterprise course of and buyer relationship administration, enabling customers to work smarter, adapt sooner, and unify their experiences. Pegasystems has been in enterprise for the reason that early 80s and relies in Cambridge, Massachusetts.

Pegasystems affords a variety of merchandise, offering options for shopper onboarding, gross sales automation, customer support and engagement, in addition to clever automation. Customers can entry real-time enterprise intelligence, automate selections and workflows, and scale the programs in keeping with their wants. The corporate’s clientele consists of Cisco Programs, the US Census Bureau, and the insurance coverage firm Aflac.

Key to Pegasystems’ strategy is course of automation. The corporate employs generative AI expertise to create a wiser, extra adaptive automation system, providing product customers a sooner and extra personalised expertise. Extra advantages of AI within the Pega platform embody autonomous improvement of low-code apps, real-time creation of buyer engagement content material, and faster derivation of insights from uncooked information.

For Pegasystems, this comes right down to earnings. The corporate is usually worthwhile, though 2Q23 noticed each the highest and backside strains miss expectations. Income got here in at $298.3 million, about $12 million beneath the forecast, whereas the EPS of 1 cent per share missed by 3 cents. Nevertheless, we should always observe that the income determine was up 8.7% year-over-year, and that the corporate reported document money move for 1H23. Working money move within the first six months of the yr was over $110 million, whereas the free money move exceeded $120 million.

Total, regardless of the lukewarm Q2 outcomes, Daniel Ives is bullish on PEGA’s prospects, sufficient to name the inventory a ‘Greatest Thought.’

“We view Pega has an underneath the radar AI play as PEGA is automating processes for enterprises driving sooner time-to-value, diminished implementation instances, and improved gross sales cycles. The corporate continues to extend worth with current prospects whereas Pega’s mannequin stabilizes resulting in extra recurring income and better gross margins pushed by Pega Cloud as the corporate continues down the trail of turning into a Rule of 40 firm. We stay extremely assured within the Pega Cloud adoption story by means of leveraging generative AI with 2024 being the inflection yr… We’re including PEGA to the Wedbush Greatest Concepts Checklist and we see a compelling danger/ reward in shares at present ranges,” Ives said.

Put into specifics, Ives charges PEGA shares an Outperform (i.e. Purchase), and his $65 worth goal suggests that it’ll acquire ~32% on the one-year horizon. (To look at Ives’ observe document, click on right here)

Trying on the consensus breakdown, we now have an nearly even cut up. 5 Buys and 6 Holds obtained within the final three months add as much as a Average Purchase consensus ranking. With a $56.60 common worth goal, the upside potential is ~15%. (See PEGA inventory forecast)

To search out good concepts for shares buying and selling at engaging valuations, go to TipRanks’ Greatest Shares to Purchase, a instrument that unites all of TipRanks’ fairness insights.

Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is vitally vital to do your personal evaluation earlier than making any funding.

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